South Africa: SA Reserve Bank Holds Rates, Signals a Cut On the Horizon

(file photo).
analysis

The South African Reserve Bank kept the repo rate, the main lending rate, on hold as expected at 6.75% on Thursday. Two out of five members of the Monetary Policy Committee voted for a cut, and the statement signalled the next move will likely be downward. This is largely because the deplorable state of the economy has put a lid on any demand pressures that could reignite inflation.

The South African Reserve Bank (SARB) kept the repo rate steady at 6.75% on Thursday, but it was close. Three members of the MPC were in favour of no change, while two voted for a cut of 25 basis points. And the next move will almost certainly be south, if the prevailing forecasts on the inflation and growth fronts hold.

"The implied path of policy rates generated by the Quarterly Projection Model is for one cut of 25 basis points to the repo rate by the end of the first quarter of 2020," the Monetary Policy Committee (MPC) said near the end of its statement. In March, a 25 basis point hike before the end of 2019 was foreseen.

The SARB revised its inflation forecasts downward. Headline inflation in its view is...

See What Everyone is Watching

More From: Daily Maverick

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.